Select an active Tax Code Name. (To be taxable, the charge must be associated with an active tax code.)

Click save.

Adding the Tax Code to Products in Existing Subscriptions

Once a product is added to a subscription, this product has a connection with the product in the product catalog. Any changes made on the product in the product catalog affect the product in the subscription. You can add the tax code to your products in the product catalog and apply the tax code to the products in existing subscriptions.

Using the Tax Modes

Zuora supports two tax modes, tax exclusive and tax inclusive.

Tax exclusive: The tax is not included in the quoted charge price. Tax is calculated and added to the charge. This is the default tax mode.

Tax inclusive: The tax is included in the quoted charge price. Tax is calculated as a "carve out" from the charge price.

To use an inclusive model, select the Tax Inclusive option from the new Tax Mode list before you select an option from the Tax Code list.

When using tax inclusive, the tax engine calculates the "included" tax portion from the whole price and displays that by tax code/rate on the invoice. This can help you collect and report on taxes.

For example:

If you are using Tax Exclusive and a 5% tax rate:

If the charge is $10, then the invoice shows a $10 charge, plus $0.50 tax. The total charge is $10.50.

If you are using Tax Inclusive and a 5% tax rate:

If the charge is $10, then the invoice will show a $10 total that includes a $9.52 charge and a $0.48 tax that has been "carved out" of the total amount.

Limitations when using the tax inclusive option

You can have multiple taxes for each tax code. However, the following limitations apply:

When using inclusive tax, you can have only one tax rate within your tax code.